Building Wealth through Investment Property
Half way through this book, not sure I can finish it. It is very biased, one sided, partly fictional, inaccurate, deceptive and full of errors and ommitions. It strongly promotes negative gearing. It was written in 1990, at the top of the property bubble. Has anyone else read this? It claims to be a best seller. She claims capital gains from property have averaged 11%. HA! Yet she also claims shares have returned only 6.9% over the previous 30 years, which is less than the 8% inflation over the same period. Give me a break. So people who invested in shares for 30 years LOST money? LOL.
Hi crashy,
Fell asleep after the 8th chapter and haven’t picked it up since. This was last year. My friends thought it was the best book in the world and suggested I buy it… I’m glad I’m not doing the negative gearing bit now. Ouch…my pockets would hurt big time!
Cheerio
Sooshie [
]“small steps make the journey” (SAS)
Haven’t read Building Wealth through Investment Property, but I’ve just finished ‘More Wealth from Residential Property’ which is much more up to date (2001).
In this book shares and property returns are compared, but are much closer together between 1980 and 2000 (13.2% shares, 15.6% property).
I find the (later) book fairly even handed re the merits of yield and growth. P93-95 mentions you can buy more high yielding properties and that your net equity is about the same as if you’d gone for growth.
I did some calculations before I read this book. I arrived at a similar conclusion to Jan, finding that equity was the same whether I went for growth or yield. But for various reasons (some of which are mentioned in Jan’s book) I have favoured CF+.
Peter
Crashy
I too have read the more recent edition and with the obvious ‘different strokes for different folks’ out of the way the following points come to mind. I note that the figures in the 13 y.o. book may be somewhat inaccurate.
I found the ‘More Wealth’ book quite positive in its appraisal of +ve gearing with an anecdote springing to mind of Jan arguing that her +ve CF regional properties were equivalent in gross gains to those of a –ve gearing <5km city investing friend.
More generally though I can’t help thinking that in a world of televised renovation melodrama and other idiot box addictions that any book prompting people to think, plan and act for independent retirement is a good thing.
Any theory/religion/ism etc. that dismisses other categorically is the less for it. After all if all it did was affirm you existing PI beliefs then it was a valuable read after all.G’day all,
I’m with you Crashy, reading these books is just time wasting.I’ve read a few different authors and you read along thinking, I KNEW THAT!and THAT’S SO OBVIOUS, so why keep reading.I don’t read any author books on investing as they might change my own style.Change your own style could be the beginning of bad run.
I have two sayings that I live by.
“Have the courage to take your own advice”
and
“Winners make it happen,losers let it happen”
Bruce G.the only thing i think is valuable from that book is that she recommends Interest Only loans and explains why its useful.
Bruce – yes, there may be many ‘I know thats’ when reading these books. But many times people may know something, but do exactly the opposite, either due to laziness, cowardice or just plain forgetfullness.
It could be anything from quitting smoking to putting off needed repairs, to not doing due diligence.
So if the book gets you to act on what you know (possibly by formalising it with checklists so you don’t overlook something) then it will have done some good.
Peter
I started reading this book 5 years ago; didn’t read it cover to cover, just skim thru sections of it while sitting in the dunny.
Back then -ve gearing was the hype, and since we had paid off our house so we decided to puchase an IP. This book gave us the courage to purchase our first one and especially the do and don’t of purchasing an IP in the book was very helpful.
I did not have a chance to read the newer edition of this book but a friend of mine did and he really recommended it.
So may be if you get the newer edition then it would be more applicable to today’s terms. Also, this new book include excel spreadsheats, I’ve been told, that are very helpful in calculating rents, total cost outlay, etc.
Hope you like the new book like my friend does.
Whilst I dont know much about Jan Somers her figures on the long term rate of return of the market is near enough.
The US Centre of National Policy analysed the returns available from the S&P500 which is roughly analagous to our All Ordinaries. What they found was that between 1961 and 2002 was 7.3%. The average return between 1872 and 2000 was 6.4%
However these figures are somewhat misleading simply because they are average returns.
A better visual guide can be gained from the following chart : http://www.stockmarkettiming.com/historical-charts.html
From 1900 to 1943, the DJIA only increased at a rate of return of 2.3% per year. Another stagnant and long duration was from about 1962 to 1982 (20 years), when the DJIA only increased at a rate of 2.4% per year.
So it is quite possible for long term holders to lose money.
Once again success favours those who are prepared.
Are all these figures people are talking about inflation adjusted?
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